Right to early termination granted in case of changes in control pursuant to Code recommendation
In the event of a change in control, Hermann Ude and Bruce Edwards are each entitled to resign their office as a member of the Board of Management for good cause within a period of six months following the change in control, after giving three months’ notice as of the end of the month, and to terminate their contract with the Board of Management (right to early termination). Future Board of Management contracts or extensions to existing Board of Management contracts will contain comparable provisions.
The contractual provisions stipulate that a change of control exists if a shareholder has acquired control within the meaning of Section 29 (2) of the Wertpapiererwerbs- und Übernahmegesetz (WpÜG – German securities acquisition and takeover act) via possession of at least 30% of the voting rights, including the voting rights attributable to such shareholder by virtue of acting in concert with other shareholders as set forth in Section 30 of the WpÜG, or if a control agreement has been concluded with the company as an independent entity in accordance with Section 291 of the Aktiengesetz (AktG – German stock corporation act) and such agreement has taken effect, or if the company has merged with another legal entity outside of the Group pursuant to Section 2 of the Umwandlungsgesetz (German reorganisation and transformation act), unless the value of such other legal entity as determined by the agreed conversion rate is less than 50% of the value of the company.
In the event the right to early termination is exercised or a Board of Management contract is terminated by mutual consent under the same conditions, the Board of Management member is entitled to payment to compensate the remaining term of his Board of Management contract. Such payment is limited to 150% of the severance payment cap pursuant to the recommendation of No. 4.2.3 of the German Corporate Governance Code as amended on 6 June 2008. The amount of the payment is reduced by 25% if the Board of Management member has not reached the age of 60 upon leaving the company. If the remaining term of the Board of Management contract is less than two years and the Board of Management member has not reached the age of 62 upon leaving the company, the payment will correspond to the severance payment cap.
Non-compete clause included
Board of Management contracts of Herman Ude and Bruce Edwards contain a non-compete clause effective for two years after the end of the contract. For the duration of the restraint on competition, they receive 50% of their last contractually stipulated basic salary as compensation each month. Any other earned income is generally deducted from the compensation paid during the period of restraint on competition, provided such other income – together with the compensation payment – exceeds the last annual basic salary paid on a monthly basis. The amount of the compensation payment itself is deducted from any severance payments or pension payments. Prior to or concurrent with cessation of the Board of Management contract, the company may declare its waiver of adherence to the non-compete clause. In such case, the company will be released from the obligation to pay compensation due to a restraint on competition six months after receipt of such declaration.
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